PenFed Reports Record Originations in Second Quarter

PenFed Credit Union of Tysons, Va., doubled its loan production in mortgages, autos and other consumer loans in the second quarter.

The nation’s fourth-largest credit union had assets of $27.6 billion at June 30, up 6.5% from a year earlier. Membership was 2.3 million as of June 30, up 14.6% from a year earlier. That translates into nearly 300,000 net new members added over 12 months, including 108,608 in the second quarter.

PenFed described its second-quarter results, as it did its first-quarter results, as the strongest in its 86-year history.

“Our practice of risk mitigation instead of risk avoidance since the start of the pandemic has led to growth and record results,” PenFed President/CEO James Schenck said in a statement to CU Times.

“We expect to sustain these volumes at PenFed through the rest of this year,” Schenck said. “We believe the market is growing for credit unions in general, and those who lead with an offensive mindset will gain market share. Credit unions that maintain a member-centric focus have opportunities to win over new members and deliver even greater value to current members.”

The mortgage division originated $4.3 billion in the three months ending June 30, a PenFed quarterly record and up from $2 billion in 2020’s second quarter. It included $301 million in home equity originations.

Combined second-quarter residential mortgage originations were up 6% from a year earlier and 5% from the first quarter for Bank of America of Charlotte, N.C., JPMorgan Chase of New York, U.S. Bank of Minneapolis, Truist of Charlotte and Wells Fargo of San Francisco.

For all lenders, the Mortgage Bankers Association on Wednesday estimated that first-mortgage originations for the second quarter rose 13% from 2020’s second quarter.

PenFed’s consumer lending division originated $3.8 billion in the second quarter, another PenFed quarterly record that compares with $1.7 billion in 2020’s second quarter.

Consumer loan originations included about $1 billion in auto loans, double the amount in the second quarters of either 2020 or 2019.

Consumer loans also included about $1.2 billion credit card originations. PenFed’s credit card balance was $1.7 billion on June 30, about the same as it was a year earlier and up from about $1.6 billion on March 31.

PenFed’s credit card balance performance was better than average for credit unions and other lenders.

Data from the Fed’s G-19 Consumer Credit Report showed credit card balances began falling after COVID-19 was declared a pandemic in March 2020, and have remained below year-ago levels since then — although the gaps started narrowing in spring. The latest data showed balances on May 30 were 0.9% lower than a year earlier for credit unions and down 2.3% for all lenders.

PenFed’s net worth ratio stood at 10.77% on June 30 — well above the NCUA’s 7% threshold for credit unions to be classified as “well capitalized.” The ratio was up from 10.63% in June 2020 and down from 10.87% in March. PenFed said its capital cushion is at an all-time high of $1 billion.

“Helping our 2.3 million members do better financially is how we measure success,” Schenck said. “Making $8.1 billion worth of loan originations in the second quarter is the result of PenFed’s value proposition of great rates for everyone, inspired leadership within our mortgage and consumer lending teams, and the dedication to member service of the 3,200 financial professionals who power PenFed forward.”